I would like to thank all of our veterans for their service in recognition of Veterans' Day (which was yesterday), particularly my father, who is a 20-year veteran of the USAF. As a veteran myself, I decided to take yesterday off from writing.
Today's "diamonds in the rough" are heavily concentrated in the Financial sector - four of the five, to be exact. I had quite a few in my scan results, including a repeat from about a week ago, Globe Life (GL). Instead of presenting a repeat so soon, I decided to add in a Consumer Staple that looks good right now.
On Friday, I did end up taking a position in the Dollar (UUP) ETF and on a diamond I presented about a week ago, DECK. I also closed some positions so that I'm now about 80% cash. I'm looking for a short-term pullback, after which I'll look for intermediate-term entries.
I love to get your feedback on DP commentary, so shoot me an email at erinh@stockcharts.com. I read every one of them and try to answer them all! Your insight helps me to tailor my commentary to what my readers and viewers want to hear about.
Welcome to "DecisionPoint Daily Diamonds," a newsletter in which I highlight five "diamonds in the rough" taken from the results of one of my DecisionPoint scans. Remember, these are not recommendations to buy or sell, but simply stocks that I found interesting. The objective is to save you the work of the initial, tedious culling process, but you need to apply your own analysis to see if these stocks pique your interest as well. There are no guaranteed winners here!
Current Market Outlook:
Market Trend: Currently, we have Trend Model BUY signals in all three timeframes on the DP Scoreboard Indexes.
Market Condition: The market is overbought, with Price Momentum Oscillator (PMO) BUY signals on the DP Scoreboards. Remember, overbought conditions can persist in a bull market.
Market Environment: It is important to consider the odds for success. Here are the current percentages on the Silver and Golden Cross Indexes:
Diamond Index:
- Diamond Scan Results: 5
- Diamond Dog Scan Results: 22
- Diamond Bull/Bear Ratio: 0.23
Enbridge Inc (ENB) - Earnings: N/A
Enbridge broke out last Friday and traded above that support level all day yesterday. Today, it followed through with a continuation of the rally. The PMO is rising and is not yet overbought. The OBV is confirming the move higher and, seeing the spike in the SCTR, is bullish.
The weekly PMO looks great, though I am a bit concerned about overhead resistance at the 2016 high coming up. There seems to be thrust behind this current breakout and I suspect it will make that breakout. I've marked areas of resistance that it might face if it continues higher.
Hartford Financial Services Group, Inc. (HIG) - Earnings: 2/3 - 2/7/2020
HIG broke out similarly, but I believe we are in the early stage of the move higher. Volume has been on the rise, along with price, as demonstrated by the strong rise of the OBV. The SCTR has quickly recovered and moved back into the hot zone above 75.
I see a very long-term flag that has executed with this breakout. The PMO has turned back up. I would look for a continuation of the current rally.
MSCI Inc (MSCI) - Earnings: 1/29 - 2/3/2020
It appears that price is trying to break out from an ascending triangle formation. Overhead resistance is holding, but the rising PMO and rising bottoms on the OBV (see thumbnail) are encouraging.
The weekly chart shows a reversing PMO. I would stalk this one rather than jump right in. We could be looking at a wide trading range, one in which price could take a dive back down to test the bottom of it. However, a breakout here might signal the beginning of a new leg higher after months of "pause" and volatility.
Sanderson Farms, Inc. (SAFM) - Earnings: 12/18 - 12/23/2019
We had a beautiful breakout on SAFM, so much so that I would probably look for a pullback before entering. The PMO has plenty of room to move higher with price. The OBV is rising and has just moved above the tops back at the end of October. The break above is bullish.
The next area of overhead resistance is just above $170 at the 2017 high. The PMO currently is showing a new crossover BUY signal. Just remember that signal will not go "final" until after Friday's close. It looks good right now, though.
Voya Financial Inc (VOYA) - Earnings: 2/3 - 2/7/2020
I like that we've already seen the pullback after the breakout on VOYA. The PMO is now making new highs, but is not overbought. I would've liked the November OBV top to be higher than September's, but it is still showing rising bottoms, which is good.
The weekly PMO triggered a crossover BUY signal last week and continues to rise. It is in mostly neutral territory and could certainly support more rallying before potentially hitting overbought extremes.
Full Disclosure: I don't own any of these stocks presently and I am not planning on purchasing any at this time. As noted earlier, I did buy a position in UUP and DECK on Friday. I did close out other positions so I'm currently about 80% in cash.
Erin Swenlin will be presenting at the The MoneyShow Las Vegas May 11-13, 2020! You'll have an opportunity to meet Erin and discuss the latest DecisionPoint news and Diamond Scans. The conference is free to attend or view online!
Watch the latest episode of DecisionPoint with Carl & Erin Swenlin LIVE on Mondays 5:00p EST or on the StockCharts TV YouTube channel here!
Technical Analysis is a windsock, not a crystal ball.
Happy Charting!
- Erin
erinh@stockcharts.com
NOTE: The stocks reported herein are from mechanical trading model scans that are based upon moving average relationships, momentum and volume. DecisionPoint analysis is then applied to get five selections from the scans. The selections given should prompt readers to do a chart review using their own analysis process. This letter is not a call for a specific action to buy, sell or short any of the stocks provided. There are NO sure things or guaranteed returns on the daily selection of "diamonds in the rough."
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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